Nisshin Steel Started Zinc Surcharge Price Mechanism

Nisshin Steel announced on Monday the firm introduced zinc surcharge price system for construction, automobile and appliances application galvanizing steel items including galvanizing steel, galvalume, Zn-Al-Mg plating steel and colored galvanizing steel for distributors, contract users and export for February order of April shipment. It is the first surcharge mechanism covering all galvanizing steel items for Japanese steel maker though Yodogawa Steel Works and JFE Galvanizing & Coating started special zinc extra charge for galvanizing steel for January shipment. Nisshin Steel is suffered from higher zinc cost, which increased by 8 billion yen for fiscal 2006 ended March 2007 from fiscal 2005, when the firm couldn’t pass the cost immediately. The firm decided to pass the change of the zinc cost smoothly through transparent system. The firm reflects change of zinc ingot price in London Metal Exchange in every US$ 1,000 per tonne change based on US$ 3,000. The change is calculated in 6-month average and the average price in August 2006-January 2007 is to be reflected for February order. The standard price change is 3,000 yen per tonne for JIS grade with 0.9 millimeters thick and coat of Z12, which represents 90 gram of zinc in a square meter on one surface and is used for construction material. The firm left the price unchanged when the average zinc price in August 2006-January 2007 was US$ 3,858 per tonne. Galvanizing steel items represent around half of Nisshin Steel’s sales volume. The firm tried to increase the base price and started study for surcharge mechanism in fiscal 2006. The firm decided to base on LME zinc ingot price for all galvanizing steel items. The firm already briefed started the notice the system for distributors in Tokyo, Nagoya and Osaka by early March and started brief for users. The firm tries to increase the base price to reflect the higher cost of zinc and expects the buyers will accept the new surcharge system appealing the transparency.